The U.S. Federal Communications Commission said Friday that it remains open to a range of options for new net neutrality rules, following a news report saying it is leaning toward a controversial approach that regulates one piece of broadband service.

The Wall Street Journal, late Thursday, reported that FCC Chairman Tom Wheeler is leaning toward a regulatory approach that includes a partial reclassification of broadband as a regulated utility.

Citing anonymous sources, the Journal reported that Wheeler is looking at separating broadband into two services for the purpose of regulation. One service would be retail broadband access and the second would be back-end transit service, which the FCC would reclassify as a regulated common carrier, similar to utility-style regulation under the traditional telephone service.

Any proposal from Wheeler would have to be approved by the five-member FCC. Wheeler has not yet decided on a net neutrality plan, said Kim Hart, spokeswoman for the agency. All broadband reclassification options “are under serious consideration, including proposals by Mozilla, CDT and others,” she said by email.

If Wheeler is considering a hybrid approach, it would be an effort to sidestep some sticky legal issues related to the commission’s past reclassification of broadband as a lightly regulated information service.

On Thursday, Verizon Communications released a white paper arguing that the FCC does not have the legal authority to reclassify broadband as a regulated common carrier.

But Verizon, the only one of the four largest U.S. broadband providers to oppose any net neutrality rules, also argued that dividing broadband into two distinct services for the purposes of regulation because the U.S. Supreme Court, in its 2005 Brand X cable broadband classification case, found that broadband was an “integrated service offering for accessing, utilizing, storing, processing and retrieving information using the Internet.”

Brand X was a small Internet service provider that wanted to use the networks owned by cable broadband carriers, but the court rejected its request. Net neutrality supporters have argued that the Brand X case also gives the FCC room to change its mind on regulatory classification of services. The Supreme Court ruled in the case that regulatory agencies have broad authority to interpret laws in their area of expertise.

Verizon, however, seemed to suggest it would again challenge the FCC in court if the agency reclassifies broadband as a common carrier. The company challenged net neutrality rules the FCC adopted in 2010, and a U.S. appeals court overturned part of those rules early this year.

Reclassification of broadband is not likely “to withstand legal challenge, especially because the commission’s reversal of decades of policy would be subject to heightened scrutiny,” Verizon’s lawyers wrote in the company’s white paper.

Some advocates of strong net neutrality rules did not welcome the news that Wheeler may be considering a hybrid regulatory approach. It’s “good news” if Wheeler has abandoned an earlier proposal that would allow broadband providers to engage in “commercially reasonable” traffic management, but hybrid approaches don’t go far enough, said Craig Aaron, president and CEO of digital rights group Free Press.

“This Frankenstein proposal is no treat for Internet users, and they shouldn’t be tricked,” Aaron said in a statement. “No matter how you dress it up, any rules that don’t clearly restore the agency’s authority and prevent specialized fast lanes and paid prioritization aren’t real net neutrality.”

The hybrid approaches divide the Internet up to protect corporations sending information, but not the customers receiving it, Aaron added.

“Chairman Wheeler can’t wave a wand, change the law, and pretend to break the Internet in two,” he added. “Such an untested, too-clever-by-half approach is bad law and a bad idea. It will not survive in court, and it is clearly inferior to reclassifying broadband.”

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.